Robust monopoly pricing

We consider a robust version of the classic problem of optimal monopoly pricing with incomplete information. In the robust version, the seller faces model uncertainty and only knows that the true demand distribution is in the neighborhood of a given model distribution. We characterize the pricing policies under two distinct decision criteria with multiple priors: (i) maximin utility and (ii) minimax regret. The equilibrium price under either criterion is lower then in the absence of uncertainty. The concern for robustness leads the seller to concede a larger information rent to all buyers with values below the optimal price without uncertainty.     

The Triumph of American Capitalism: An Assyrian Perspective

The collapse of communism, the success of the US economy and the rise of the internet have led many to argue that the rest of the world should adopt American capitalism. This article uses evidence from the ancient Mediterranean and Middle East to argue that the most successful form of capitalism in each area (and era) depends on the context of the time, the culture of the people and the history of the region.     

Functional marketing plan development in department store retailing

Retailers are now implementing the types of formal marketing planning programs that have long characterized consumer goods firms. The functional marketing plans that are developed tend to be a year or less in duration. The primary responsibility for developing the plans resides with the general merchandise manager. The planning efforts of the retailing executive, in spite of their short term nature, do reflect an awareness of the importance of understanding the strengths and weaknesses of competitors and of the need to spell out issues involving profit planning, sales promotion planning, merchandise addition/deletion decisions, and issues involving inventory/physical distribution. A variety of marketing plans are developed. Separate plans are developed by merchandise lines in many organizations. The authors wish to express their appreciation to The Conference Board for permission to use the questionnaire, with modifications, underlying research for The Marketing Plan, Report No. 801, The Conference Board, 1981, as the basis for formulating the questionnaire used in this research     

Protectionism, Intellectual Property, and Consumer Protection: Was the Uruguay Round Good for Consumers?

Critics of the Uruguay Round of the GATT have contended that its provisions threaten the ability of individual nations to enact and keep in place strong consumer protection measures. Agreements regarding non-discriminatory treatment and protection of intellectual property, critics believe, undermine important consumer policies designed to promote consumer health, safety, and information. This paper reviews the arguments and evidence regarding the potential of the Uruguay Round agreements to threaten consumer protection. Although the potential for such threats does exist, the record to date does not suggest any significant retreat from consumer protection due to free trade agreements.     

The value and effects of introducing high standard train and bus concepts in Blekinge, Sweden

A set of improvements were introduced on a railway line in the south of Sweden in January 1992, including a new train concept, improved timetable and lower fares. The new train replaced a combination of old rail cars and standard coaches (bus). Furthermore, 18 months later, a new high comfort coach (bus) service was introduced as a complement to the train timetable to increase the number of departures. Forecasts from a national four-step model system, based on Revealed Preference data, which did not cover explanatory factors like mode concept, comfort, mode image, was made and compared with a forecast based on stated preference data choice model. Both type of forecasts were compared to travel statistics. Stated Preference data have been collected from car drivers, coach and train passengers. The set of improvements have been included in the SP alternatives presented to the subjects. A structured logit model, a regression model and a linear programming model are compared. Unstructured and structured logit models are compared. Logit models have been estimated and used to form a mode choice model which predicts the changes in market shares between the train and car. The choice model forecast coincide, accidentally, with actual demand 8–9 months after the introduction of the set of improvements (a 40% increase in journeys). The set of improvements, including the new train service, has proven to be a success with more than 100% increase in travel after only two years of operation. Differences in estimated logit models for 1991 and 1992 are explained as partly due to asymmetry effects and partly to shortcomings in the SP data collection technique. Logit model estimates for train and coach are compared. The value of high standard coach service, running in parallel to the train, is estimated. The new coach gained few new passengers and also a much lower monetary value than the train by both train and bus passengers.     

Fighting against the odds

The fight for power is not only over immediate rents, but also over advantageous positions in future power struggles. When incumbency yields an extra fighting edge, current struggles involve high stakes as a victory today may guarantee the victory also tomorrow. Such an incumbency edge may stem from the control of the army, the police and other instruments reserved for the government. The conclusions drawn from static conflict models are turned on their head when the fight is also over the incumbency edge. A sharper incumbency edge increases the implicit prizes of winning. The fighting intensity may therefore rise when the strength of each side becomes more unequal. Unbalanced fights can last long and become particularly severe. This is in contrast to the standard result that equal strengths give the most intense fighting. Received: June 2004, Accepted: December 2004, We want to thank the editor and a referee.     

The Origins of the German Corporation - Finance, Ownership and Control

The ownership of German corporations is quite different today from that of Anglo-American firms. How did this come about? To what extent is it attributable to regulation? A specially constructed data set on financing and ownership of German corporations from the end of the 19th century to the middle of the 20th century reveals that, as in the UK, there was a high degree of activity on German stock markets with firms issuing equity in preference to borrowing from banks, and insider and family ownership declining rapidly. However, unlike in the UK, other companies and banks emerged as the main holders of equity, with banks holding shares primarily as custodians of other investors rather than on their own account. The changing pattern of ownership concentration was therefore very different from that of the UK with regulation reinforcing the control that banks exercised on behalf of other investors.